Times are changing, and with it, customer preferences when paying for goods ordered over the Internet. A few years ago cash on delivery was king, but now its popularity is rapidly declining. The reason is primarily the increasing costs associated with this method of payment. Customers try to save every crown, and the fee for cash on delivery, which can reach up to CZK 300, is unacceptable for many.
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The declining popularity of cash on delivery
The covid-19 pandemic has contributed to a decline in the popularity of cash on delivery as people have become accustomed to paying for orders in advance for convenience contactless delivery. In addition, the younger generation prefers modern payment methods such as Apple Pay or Google Pay.
Development of payment methods in numbers
According to a survey by the Association for Electronic Commerce (APEK), in 2010 cash on delivery accounted for 60% of all payments in Czech e-shops. In 2022, it was just 20%. On the contrary, the share of online payments increased from 30% in 2010 to 70% in 2022.
A survey by the STEM/MARK agency showed that in 2022, 80% of Czech customers preferred to pay by card or bank transfer. They cited convenience (65%), speed (55%) and lower fees (40%) as the main reasons. Only preferred cash on delivery 15% respondents.
Supporters of cash on delivery and disadvantages for merchants
Despite these trends, cash on delivery still has its supporters, who consider it the safest option for online shopping. The Czech Republic is one of the countries where cash on delivery is available more popular than in the rest of Europe. However, this method of payment is disadvantageous for merchants, as customers often do not receive the ordered goods, and e-shops incur unnecessary transport costs. It is expected that sellers will start to limit cash on delivery, especially for smaller orders, and keep it only for larger purchases. Cash on delivery prices could double.
Unclaimed packages and environmental impact
It might surprise you, but cash on delivery has a really negative impact on the environment. Because they generate additional transport in case unclaimed parcels, which increases the carbon footprint of e-commerce. Every fifth package sent on cash on delivery is ultimately not picked up by the customer. This generates unnecessary transport and, according to DPD estimates, increases CO2 emissions from e-commerce by 10%. Switching to online payments can help reduce the volume of returns and contribute to a more sustainable operation of e-shops.
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Deferred payments as a solution
The solution seems to be deferred payments, which combine the benefits of cash on delivery with those for merchants. The customer can have the goods try before paying and make sure she wants to keep him. The merchant gets the money shortly after the order. Many Czech e-shops already offer their own deferred payments (e.g. Mall Pay, Alza Třetinka) or cooperate with services such as Twisto, Klarna or Skip Pay.
The future of payment methods
Experts predict that support for deferred payments will increase at the expense of cash on delivery and the structure of payment methods in e-shops will change significantly. According to the predictions of the Czech Statistical Office, cash on delivery could reach 2030 at the current rate drop to 5 to 10%. The main accelerators will be the development of instant payments and new methods such as Buy now, pay later.
A question of some customers’ preferences
The question remains how the customers will pay they prefer cash on deliverybecause they do not want or cannot use online payments.
Sources: Association for Electronic Commerce, Czech Statistical Office, Skip Pay, Comgate, Mastercard, Shoptet
